HP Reverses Course, Decides to Stay in PC Business

Jeff James

Thu, 2011-10-27 17:14

HP issued a statement earlier today indicating that it had reversed course on the controversial decision -- made by ex-CEO Leo Apotheker -- to exit the personal computer business. The decision to keep the personal systems group (PSG) is the first major decision by new HP CEO Meg Whitman, who joined HP less than a month ago, soon after Apotheker was ousted by the HP board of directors.

"HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees,” Whitman said in a prepared statement. "HP is committed to PSG, and together we are stronger."

Apotheker's decision to exit the PC business and shutter HP's newly-acquired WebOS device business generated a storm of controversy, created uncertainty about HP's future product efforts, and helped hasten the departure of Apotheker, who was working to transform HP into an enterprise software and services business in the same mold as IBM. Hired in September 2010, Apotheker only lasted 11 months at HP, and was replaced by Whitman in late September 2011.

HP's statement indicated that a "data-driven evaluation" was used to determine the value of PSG to the company, and that the cost to create a stand-alone PC business was prohibitive and "outweighed any benefits of separation." It's unclear how much money HP lost in the period after it announced its decision to spin off its PC business, but the confusion generated by the decision likely led many IT purchasing managers to consider other hardware vendors for system upgrades. Who wants to buy PCs from a company that has announced it plans to exit the PC business?